Just before the emergency economic summit 2

CONTINUED FROM YESTERDAY

Abstaining completely, for the exchange-rate stabilisation period, from using any ways-and-means facilities available to it at the Central Bank-getting the salaries and emoluments of holders of elective offices and political appointees drastically reduced/slashed in half. Former President Obasanjo recently cried out against the obscenely high salaries and allowances that federal legislators have been carting away from the national treasury ; huge portions of such funds end up chasing dollars at any price in the foreign-exchange market-announcing its intention to drastically reduce the size of government over the coming periods : the Oronsaye report that recommended the shut-down of hundreds of un-necessary and not-fit-for-purpose federal agencies is still languishing somewhere.

Introducing a series innovative taxes aimed at sterilising a part of the foreign-exchange purchasing power of the wealthy class, while helping to rake in vastly more Naira revenues. Blinded by easy, free-flowing oil revenues, Nigeria has traditionally been negligent and carefree in the matter of non-oil fiscal revenue generation.

With the savings and streams of new cash flowing into government coffers, the government would obtain more resources to redistribute to programmes that immediately touch and put spendable cash in the pockets of the mass of low-income (and no-income) earners who form the bulk of the populace and potential consumers.

Not only would that redistribution take (some) pressure off the Naira, it would boost demand for local goods and services which in turn would drive the employment of more factory and service hands, reduce un-employment and again reinforce demand for goods and services and so on and so forth. When you put extra cash in the hands of someone who has already met his basic life and leisure needs, the use to which he puts that extra cash is more likely to « hurt » the value of your national currency than is the case if that extra cash is channeled to a low-income urban or a rural family.

My belief is that our governments knew this but had always been scared to touch the privileges of the weathy and powerful class who in any event would continue to be able to meet comfortably their basic and leisure needs.

With its limitless taxing powers, here is a small sample of taxes that the government can immediately roll out to generate cash, redistribute wealth out of the pockets of the wealthy class to fund the developemnt of the productive sectors of the economy and provide succour to the weak while moderating the capacity of the wealthy to attack our national currency: -yearly registration tax on electric-power generating sets determined in accordance with the engine capacity just as you register your vehicles (remember that for industrial and commercial users of gen-sets, such taxes are deductible expenses) ; think of the favourable effect on the economy if funds raised from this source are applied exclusively to house and feed students in public universities !
-sharp increase in the cost of number-plates (issuance and renewal) for luxury automobiles while waiving or reducing the cost for low-caterogy vehicles-special tax on domestic and international airline tickets sold to Nigerians (less than 5% of Nigerians would be affected ; the measure would be Naira-supportive as reduced demand for air travel would mean reduced demand by airlines for foreign exchange)-counterpart-tax payable on real-estate property owned abroad by home-resident Nigerians the amount of which shall be equal to the tax levied on the property in the country of location and shall be payable in any freely convertible currency (think of the streams of cash that the government would haul in each year, at least, for a while…)
-tax on half- or full page non-commercial, non-official, ceremonial advertisements like congratulatory, birthday messages, burial announcements and such like (think of the thousands of vanitous ads that are splashed on newspaper pages each year and what the government can smartly hurl in from that source).

As regards oil revenues, perhaps the government would now accept to do what Norway did immediately it became an oil producer, decades after Nigeria acquired that status : you don’t monetise and spend oil revenues on useless recurrent expenditure (when not looted outrightly) or squandered on purchasing and keeping harems of gleamy official jets and automobiles or constructing useless infrastructure like stadiums and airports in remote state capitals while the country is in a dire need of decent well-staffed primary and secondary schools as well as large, well-funded, world-class universities and technological research establishments. Normally, no more than 10% of current oil revenues should fund the central and state governments’ recurrent budgets while the remaining 90% should compulsorily (that is, constitutionally) be earmarked to fund useful, future-generations’ projects in education, health, roads, housing, energy, public security systems (not « security votes », not defence expenditure!) within a clear and transparent framework.

On the aggregate, the recurrent expenditure should be pegged at a reasonable maximum percentage of the penultimate year’s non-oil revenues with the balance, again, funding nothing but meaningful, real pro-growth infrastructure projects through the length and breadth of the federation.

If Nigerians, today, have nothing good to say about oil or the oil industry, it is not oil but the successive Nigerian executive and legislative leaders who should be blamed as all these leaders may be accused of having betrayed the sacred duty to manage the country’s resources in the best interest of its people.

Nigeria’s true economic performance should henceforth be measured by the performance of the non-oil sector as the numbers from the upstream oil sector merely distort the records of our real performance. It is regrettable that past governments bandied around  synthetic  or lip-stick  economic growth-rate figures which, just a small shower (external shock) was enough to wash completely away in seconds, as we’ve seen over the last 12-18 months.

For a vibrant and intelligent people that Nigerians have at least been able to show themselves to be, it is an insult and a shame that more than fifity years later, Nigeria would still be sucking from the crude-oil «feeding bottle». That must stop.
Concluded

• Lafiaji, an economist, is a former executive secretary of the African Petroleum Producers’ Association, Brazzaville, Congo.